Washington Post 2015 Annual Report Download - page 114

August 1. Under the terms of the Notes, unless the Company has exercised its right to redeem the Notes, the
Company is required to offer to repurchase the Notes in cash at 101% of the principal amount, plus accrued and
unpaid interest, upon the occurrence of both a Change of Control and Below Investment Grade Rating Events as
described in the Prospectus Supplement of January 27, 2009.
In June 2015, Cable ONE issued $550 million in debt. With the Cable ONE spin-off effective on July 1, 2015,
the Cable ONE debt is no longer an obligation of the Company.
On June 17, 2015, the Company terminated its U.S. $450 million, AUD 50 million four-year revolving credit
facility dated June 17, 2011. No borrowings were outstanding under the 2011 Credit Agreement at the time of
termination. On June 29, 2015, the Company entered into a credit agreement (the Credit Agreement) providing
for a new U.S. $200 million five-year revolving credit facility (the Facility) with each of the lenders party
thereto, Wells Fargo Bank, National Association as Administrative Agent (Wells Fargo), JPMorgan Chase Bank,
N.A., as Syndication Agent, and HSBC Bank USA, National Association, as Documentation Agent (the Credit
Agreement). The Company is required to pay a commitment fee on a quarterly basis, based on the Company’s
leverage ratio, of between 0.15% and 0.25% of the amount of the Facility. Any borrowings are made on an
unsecured basis and bear interest at the Company’s option, either at (a) a fluctuating interest rate equal to the
highest of Wells Fargo’s prime rate, 0.50 percent above the Federal funds rate or the one-month Eurodollar rate
plus 1%, or (b) the Eurodollar rate for the applicable interest period as defined in the Credit Agreement, which is
generally a periodic rate equal to LIBOR, in each case plus an applicable margin that depends on the Company’s
consolidated debt to consolidated adjusted EBITDA (as determined pursuant to the Credit Agreement, “leverage
ratio”). The Company may draw on the Facility for general corporate purposes. The Facility will expire on
July 1, 2020, unless the Company and the banks agree to extend the term. Any outstanding borrowings must be
repaid on or prior to the final termination date. The Credit Agreement contains terms and conditions, including
remedies in the event of a default by the Company, typical of facilities of this type and requires the Company to
maintain a leverage ratio of not greater than 3.5 to 1.0 and a consolidated interest coverage ratio of at least 3.5 to
1.0 based upon the ratio of consolidated adjusted EBITDA to consolidated interest expense as determined
pursuant to the Credit Agreement. As of December 31, 2015, the Company is in compliance with all financial
covenants.
On September 7, 2011, the Company borrowed AUD 50 million under its revolving credit facility. On the same
date, the Company entered into interest rate swap agreements with a total notional value of AUD 50 million and
a maturity date of March 7, 2015. These interest rate swap agreements paid the Company variable interest on the
AUD 50 million notional amount at the three-month bank bill rate, and the Company paid the counterparties a
fixed rate of 4.5275%. These interest rate swap agreements were entered into to convert the variable rate
Australian dollar borrowing under the revolving credit facility into a fixed-rate borrowing. Based on the terms of
the interest rate swap agreements and the underlying borrowing, these interest rate swap agreements were
determined to be effective and thus qualified as a cash flow hedge. As such, any changes in the fair value of these
interest rate swaps were recorded in other comprehensive income on the Consolidated Balance Sheets until
earnings were affected by the variability of cash flows. On March 9, 2015, the Company repaid the AUD
50 million borrowed under its revolving credit facility. On the same day, the AUD 50 million interest rate swap
agreements matured.
During 2015 and 2014, the Company had average borrowings outstanding of approximately $428.4 million and
$450.9 million, respectively, at average annual interest rates of approximately 7.1% and 7.0%, respectively. The
Company incurred net interest expense of $30.7 million, $33.4 million and $33.7 million during 2015, 2014 and
2013, respectively. At December 31, 2015 and 2014, the fair value of the Company’s 7.25% unsecured notes,
based on quoted market prices (Level 2 fair value assessment), totaled $436.6 million and $450.3 million,
respectively, compared with the carrying amount of $398.7 million and $398.3 million. The carrying value of the
Company’s other unsecured debt at December 31, 2015, approximates fair value.
99 GRAHAM HOLDINGS COMPANY